Ahmedabad grows as a commercial realty destination; fuels residential development

Traditionally popular as the educational hub of Gujarat, Ahmedabad is now evolving as a progressive commercial destination in the state.

Ahmedabad’s commercial realty is receiving a healthy demand due to the massive growth of the industrial sector and fast-paced development on the infrastructural front. Demand for office space in the city has been increasing over the last few years which has contributed to capital values in commercial centres like Sarkhej-Gandhinagar (SG) Highway and Prahlad Nagar escalating by 20-30 percent. Concurring with the trend, the latest report by Cushman and Wakefield identified Ahmedabad among key Indian cities where the commercial space demand is expected to go up. 99acres.com examines Ahmedabad’s commercial real estate and the future outlook of the sector.

Growth drivers

Presence of major players: While the key drivers of Ahmedabad’s economy are the chemical, pharmaceutical, and textile industries, it is also the largest supplier of denim and the largest exporter of gems and jewellery in the country. It is home to several major foreign companies such as Stork (Netherlands), Rollepaal (Netherlands), and Bosch Rexroth (Germany). The nation’s two biggest pharmaceutical companies, Zydus Cadila and Torrent Pharmaceuticals, are based in the city, which also serves as the corporate headquarters to the Nirma Industries and the Adani Group.

Talent pool: The city’s thriving educational institutes such as Entrepreneurship Development Institute of India, Indian Institute of Management (IIM), Nirma University of Science and Technology, and Institute of Strategic Marketing and Communication (MICA) have been a constant resource pool for various industries in the city. Thus, the availability of talent also makes Ahmedabad a lucrative destination for commercial units.

Start-up culture: Ahmedabad is a promising destination for start-ups, a fact that earned it a place in NASSCOM Startup Landscape Report in 2014. Since then, the start-up phenomenon has boomed in the city, creating greater demand for office space. Mahindra & Mahindra has recently launched the operations of its digital mobility start-up 'SmartShift' in the city.

Emerging commercial hubs

SG Highway: The SG Highway connects Ahmedabad to the capital city of Gandhinagar. Towards the south, it connects to Gujarat’s prominent business destinations - Vadodara, Bharuch, and Surat. Through a network of ring roads, it enjoys access to the entire city and contributes to a major part of National Highway 8C. The strategic location adds to the commercial value of the stretch, leading to the rise in residential projects as well.

As confirmed by 99acres’ Insite (Jan-March 2017), this micro-market registered maximum concentration of 'Grade A' office spaces in the city during the first quarter of 2017. The area has also become a one-stop residential investment destination for individuals working in nearby Sanand Industrial Hub.

CG Road: CG road, which connects Paldi to Navrangpura, is one of the main commercial hubs located in the Central Business District (CBD) of Ahmedabad and, thus, is popular among commercial developers. Located near premium commercial complexes, five-star hotels (such as Four Points By Sheraton) and upmarket residential localities, it is an ideal place for setting up offices and showrooms in West Ahmedabad. The corridor has properties in both Grade A and B categories. It has seen an appreciation in monthly lease owing to the expansion of Information Technology (IT) and retail sector in Ahmedabad, confirms Mukesh Mishra from Setu Real Estate Consultant.

Prahlad Nagar: Prahlad Nagar is fast developing as a commercial hub in the south-west corner of Ahmedabad. The micro-market is a well-planned area with a proper hierarchy of roads, distribution of parking spaces, and community facilities. The increase in the number of high-end commercial projects and the arrival of many pharmaceutical and chemical companies in the locality has prompted several luxury budget hoteliers to expand their chains in the region.

Future outlook

Increasing footprint of global companies is expected to fuel demand and quality of commercial real estate in the city. The expansion of Ahmedabad Municipal Corporation’s limits, improved connectivity, and infrastructure development will also spur growth in the segment. Further, experts are confident that the entry of large corporates into the city will boost the employment scenario and, hence, attract Non-Resident Indian (NRI) investors in the commercial space, who are currently more interested in residential projects. However, the city has its own set of challenges.

“Though the sales of commercial properties in the city had picked up in the first half of 2016 because of the revival in the manufacturing sector, the city needs to attract large IT/ITeS employed as well,” states Mishra. While there is enough space to build IT parks in South Ahmedabad, the state government needs to focus on building transport systems for the south quadrant to improve intra-city connectivity. If these issues are addressed, the commercial realty segment in Ahmedabad can be certain about a bright future.

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. 99acres does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.